There are loans for people who have bad credit. This type of finance company does not run a credit check before approving. Of course, the interest rate is much higher than conventional sources of borrowing. When you consider the totality of the circumstances it is actually a pretty good deal. However, these types of deals should only be used if absolutely necessary.
Even though there is no background check involved there are still some requirements that must be met. You need to be employed for a minimum of three months with your current employer. You need a checking account. You can not owe on any outstanding loans that are current. If you meet these requirements then you will qualify to borrow the money.
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The way it works is that you will receive an advance on your paycheck. You write a post dated check for the loan payment. On your payday the post dated checked is submitted to your bank and the loan is paid back. This type of borrowing arrangement is often referred to as an pay day advance loan. It is very helpful in situations when you have unexpected expenses between paychecks.
The finance charge you pay is a fixed dollar amount per one hundred dollars borrowed. If you receive five hundred dollars and the finance charge is twenty five dollars per one hundred dollars, your finance fee will be a total of one hundred twenty five dollars. You will write a post dated check for six hundred twenty five dollars. You will receive five hundred dollars in cash.
If for some reason you will not possess enough money in your checking account for the postdated check to clear, you can roll it over but you will pay another finance fee. Usually there is a limit to how many times you can roll it over. As you can easily understand, rolling over these costly deals is very expensive.
Payday advance borrowing should only be done when there is no other choice. This is because it is very expensive. You should try to borrow the money from a friend or relative first. Sometimes an employer may be able to help you. However, if you have no other choice, it is nice to know that this type of borrowing is available.
Payday advance companies are certainly fulfilling an important demand for short term borrowing of this type. Banks will not enter this marketplace. There is a huge demand from working people for this type of short term financial help. This type of borrowing should only be used when all other options are not available.
Loans for people who have bad credit can be very helpful when you are in between paychecks and there are unexpected expenses. They can be a real lifesaver if you have a financial emergency. However, the finance charges make them an extremely expensive form of borrowing. There is a danger that you could be stuck in an endless cycle of borrowing every pay period. For this reason, they should be used rarely when there are no other solutions to the problem.
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